Picture: Henk Kruger/African News Agency (ANA)
Picture: Henk Kruger/African News Agency (ANA)

New Eskom boss cautions against rushing unbundling

By Reuters Time of article published Jan 27, 2020

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JOHANNESBURG - Eskom's new chief executive said on Sunday that a plan to split the loss-making power utility should not be rushed, because risks associated with the process need to be assessed and managed properly.

President Cyril Ramaphosa announced last year that Eskom would be split into units for generation, transmission and distribution, as part of plans to overhaul the country's power sector and open the industry up to more competition.

A government paper showed in October that Pretoria plans to set up a transmission unit within Eskom by the end of March and complete the legal separation of all three units in 2022.

But in an interview with eNCA TV on Sunday, Andre de Ruyter said while Eskom was committed to a restructuring of the power industry as set out in the government paper, the utility wanted to carefully manage risks associated with the process.

“What we are careful of is with a precipitous unbundling to create risks that may end up causing us to have a less stable system,” said De Ruyter, who took charge of Eskom on January 6.

“For us to rush into full legal separation from day one creates a number of risks.

"Transfer of assets: our lenders will be concerned about assets that they have loaned us money against; there could be capital gains tax events that could cost us a lot of money,” he added.

The government paper had set out a vision for a restructured electricity supply industry, where Eskom could relinquish its near-monopoly and compete with independent power producers (IPPs) to generate electricity at least cost.

One or more Eskom generation units will be created to compete with IPPs and the distribution model will be reformed, so more power can be procured from small-scale producers.

Eskom supplies more than 90percent of the country's power, however, its creaking fleet of coal-fired plants are struggling to meet electricity demand in the country.

The state-owned utility implemented severe nationwide power cuts in several bursts last year and sporadically earlier this month.

The power outages have pushed the economy to the brink of recession and piled the pressure on Ramaphosa, who came to power with a pledge to revive investor confidence and lift economic growth.


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